MAYOR BLOOMBERG TESTIFIES ABOUT THE NEED FOR A CARBON EMISSIONS PRICING SYSTEM BEFORE THE U.S. HOUSE OF REPRESENTATIVES COMMITTEE ON WAYS AND MEANS

Outlines Four Principles a Federal Pricing System Should Include as City Releases Annual 'Greenhouse Gas Inventory'

The following is the text of Mayor Bloomberg’s
written testimony:

"Thank you, Chairman Rangel, and members of the committee.

"It's time for our country to reduce our dependence on fossil fuels.
Doing so will increase our economic efficiency and competitiveness, enhance our
national security, improve our air quality, promote public health and reduce our
impact on global climate change.

"Many State and local governments are already taking the lead. In New
York City, we've set a goal of reducing our output of greenhouse gases by 30
percent by the year 2017 - even as our population grows to an unprecedented nine
million people. We're pursuing an aggressive, multi-pronged strategy that
stresses both conservation and encouraging the use of alternative
fuels.

"We're making progress. Today, we're releasing our annual 'greenhouse
gas inventory' for New York City. It shows that our carbon footprint shrank 2.5
percent between 2005 and 2007, thanks mainly to milder weather and two new and
more efficient power plants.

"Our biggest challenges, however - energy consumption and vehicle
traffic - continue to grow faster than our population. That demonstrates why,
for state and local efforts to be truly effective, they must be matched at the
Federal level. That must start with a national policy that puts a price on
carbon emissions.

"Set such a price, and the market will reduce emissions, by providing
an incentive to use cleaner fuels, and by leveling the playing field for
alternative forms of energy. Pricing carbon emissions could involve levying a
carbon tax, as Congressmen Stark and Larson have proposed. This is the
approach nearly every economist prefers, as do I. Or, as others, including
Congressman Doggett, have proposed, comprehensive 'cap and auction' systems on
greenhouse gas emissions could also be effective.

"Any such pricing regimen must be based on four essential
principles:

"First, implementation should be simple and straightforward. The best
place to put a price on carbon emissions that exceed a legislated cap is
'upstream,' at the points of fossil fuel production, such as coal mines and
petroleum refineries. This would mean assessing a carbon price at hundreds of
locations in our nation, not the many thousands that would have to be monitored
if the price were to be imposed further downstream in the process of using
fuels.

"Second, we should ensure a uniform price on carbon emissions that is
uniformly administered. The government's auction of credits must cover 100
percent of credits. Sweetheart deals for the well-connected would distort and
undercut the process, sowing confusion and mistrust.

"Some industries argue that they will be injured. But they are the
worst polluters. They have to clean up fastest. Better that than their hiring
lobbyists to strike deals that would undermine the whole process. Ensuring price
fairness and predictability will also encourage the investment in alternative
energy sources essential to our nation's future.

"Third, carbon pricing must be accompanied by a commitment to revenue
neutrality. It's been estimated that a federal auction of carbon credits could
bring $1.1 trillion into the U.S. Treasury during the first six years that such
a system would be in place. If Washington gets to treat this like a revenue
piñata, Americans will be justifiably repelled, and the cause of reducing our
dependence on fossil fuels will be tragically set back. So Congress should
offset the higher costs that consumers will bear as a result of carbon pricing
with rebates on payroll or other personal taxes.

"Fourth, and finally, while a 'carbon tariff' on nations that don't
sign on to a global agreement to reduce their emissions may eventually become
necessary, let's lead by example, and not look for excuses to retreat into
protectionism.

"Members of the committee, it's very encouraging to see how rapidly the
debate on carbon pricing is advancing. That's evidenced by this hearing about
the best way to design such a pricing system. The devil, as always, remains in
the details. But by employing the principles that I've just outlined, I
believe we can create a carbon-pricing system that is fair and
forward-looking."